Bank of America has rolled out a new service designed to make it more competitive with companies that allow people to transfer money between one another using only their mobile phones.
The Charlotte-based bank on Wednesday announced that its customers can now instantly send and receive payments with account holders of Minneapolis-based U.S. Bank. The capability could be used, for example, when two friends split a check after dinner.
The move underscores the push by traditional banks to better stand out in the increasingly competitive “peer-to-peer” payments industry.
Similar services already offered by companies such as PayPal and Facebook are popular with consumers, especially younger ones, who want the ability to transfer money using only a finger tap on a phone screen.
Bank of America and U.S. Bank are hoping their real-time transfers appeal to people who use other services that currently take a day or more for money to move between accounts. The move also underscores the overall competition between traditional banks and financial technology start-ups at a time when people are increasingly using their phones for financial transactions.
Bank of America says it will not charge customers to make instantaneous transfers. Payments can be sent from a phone, tablet or computer.
U.S. Bank will charge a flat fee of $6.95 per transfer.
Before Wednesday’s announcement, Bank of America customers could instantly send money only to other Bank of America account holders.
Bank of America said it and U.S. Bank are the first banks to offer the instantaneous payments through a network jointly owned by the two banks and some other large U.S. lenders.
But the network’s success, and the threat it poses to similar services from non-banks, could hinge on how quickly other banks in the network begin offering real-time payments. Other banks on the network currently allow their customers to transfer money between the banks, but they do not transfer the funds in real time.
Wells Fargo spokesman Josh Dunn said the San Francisco-based bank plans to start offering instantaneous payments around the middle of this year.
Bank of America and U.S. Bank are the second- and fifth-largest U.S. commercial banks by assets, respectively.